ACCO 2007 3 Process Costing Application PDF

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LO (WA EUP) In manufacturing its products, Trevano Corp. adds all direct material at the beginning of the production process. The company’s direct labor and overhead are considered to be continuously at the same degree of completion. September production information is as follows:Information is as f...

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LO.2 (WA EUP) In manufacturing its products, Trevano Corp. adds all direct material at the beginning of the production process. The company’s direct labor and overhead are considered to be continuously at the same degree of completion. September production information is as follows: Information is as follows: Beginning WIP Inventory Started during September Completed during September

24,000 pounds 600,000 pounds 608,000 pounds

As of September 1, the beginning WIP Inventory was 45 percent complete as to labor and overhead. On September 30, the ending WIP Inventory was 65 percent complete as to conversion. a. b. c.

Determine the total number of pounds to account for if Trevano uses the weighted average process costing method. Determine the equivalent units of production for direct material. Determine the equivalent units of production for direct labor and overhead.

14. a. 24,000 + 600,000 = 624,000 pounds b. & c. Beginning WIP Inventory Started To account for Completed Ending WIP Inventory

24,000 600,000 624,000 (608,000) 16,000

Units started and completed = 608,000 – 24,000 = 584,000

Beginning WIP Inventory Started & completed Ending WIP Inventory (65%) EUP

Units 24,000 584,000 16,000 624,000

DM 24,000 584,000 16,000 624,000

CC 24,000 584,000 10,400 618,400

LO.3 (FIFO EUP) Assume that Trevano Corp. uses the FIFO method of process costing. a. a. b. c.

What proportion of work needs to be performed on the beginning inventory units to complete them? What are the equivalent units of production for direct material? What are the equivalent units of production for conversion?

a. Work to be performed = 100% – 45% = 55% for conversion costs only b. & c. Beginning WIP Inventory Started Accountable for Completed Ending WIP Inventory

24,000 600,000 624,000 (608,000) 16,000

Units started and completed = 608,000 – 24,000 = 584,000 Beginning WIP Inventory (55%) Started & completed Ending WIP Inventory (65%) EUP

Units 24,000 584,000 16,000 624,000

DM 0 584,000 16,000 600,000

CC 13,200 584,000 10,400 607,600

LO.2 (WA EUP) O’Malley Corp. uses a weighted average process costing system. Material is added at the beginning of the production process and overhead is applied on the basis of direct labor. O’Malley’s records indicate that 70,000 units were in process at the beginning of May 2010; these units were 30 percent complete as to conversion. In May, the company started 445,300 and completed 427,500 units. May’s ending inventory was 35 percent complete as to conversion.

a. b.

What are the equivalent units of production for direct material? What are the equivalent units of production for conversion?

16. a. & b.

Beginning WIP Inventory (30%) Started To account for

70,000 445,300 515,300

Beginning WIP Inventory Started & completed Ending WIP Inventory (35%) EUP

Beginning WIP Inventory Started and completed Ending WIP Inventory Accounted for

70,000 357,500 87,800 515,300

Units 70,000

DM 70,000

CC 70,000

357,500

357,500

357,500

87,800

87,800

30,730

515,300

515,300

458,230

LO.3 (FIFO EUP) Assume that O’Malley Corp. uses the FIFO method of process costing. a. b.

What are the equivalent units of production for direct material? What are the equivalent units of production for conversion?

19. a. & b.

Beginning WIP Inventory Started To account for

70,000 445,300 515,300

Beginning WIP Inventory Started and completed Ending WIP Inventory Accounted for Units

Beginning WIP Inventory (70%) Started & completed Ending WIP Inventory (35%) EUP

70,000 357,500 87,800 515,300 DM

CC

70,000

0

49,000

357,500

357,500

357,500

87,800

87,800

30,730

515,300

445,300

437,230

LO.2 (WA EUP) For each of the following situations, use the weighted average method to determine the equivalent units of production for labor and overhead, assuming that they are continuously at the same percentage of completion: a.

Beginning WIP Inventory (40% complete) Units started in production Units transferred out Ending WIP Inventory (70% complete)

10,000 350,000 344,000 16,000

b.

Beginning WIP Inventory (30% complete) Units started in production Units transferred out Ending WIP Inventory (80% complete)

40,000 480,000 ? 26,000

c.

Beginning WIP Inventory (55% complete) Units started in production Units transferred out

15,000 405,000 415,800

d.

Ending WIP Inventory (90% complete)

?

Beginning WIP Inventory (25% complete) Units started in production Units transferred out Ending WIP Inventory (45% complete)

10,800 ? 351,600 18,300

17. a.

Units 10,000 350,000 360,000

CC

Beginning WIP Inventory (40%) Started Units to account for Beginning WIP Inventory Started and completed Transferred out Ending WIP Inventory (70%) Units accounted for

10,000 334,000 344,000 16,000 360,000

10,000 334,000

Units 40,000 480,000 520,000

CC

Beginning WIP Inventory (30%) Started Units to account for

b.

Beginning WIP Inventory

11,200 355,200

40,000

40,000

Started and completed

454,000

454,000

Transferred out

494,000

Ending WIP Inventory (80%) Units accounted for

c.

26,000

20,800

520,000

514,800

Units Beginning WIP Inventory (55%)

15,000

Started

405,000

Units to account for

420,000

Beginning WIP Inventory Started and completed Transferred out Ending WIP Inventory (90%) Units accounted for

15,000 400,800 415,800 4,200 420,000

d.

CC

15,000 400,800 3,780 419,580

Units 10,800 359,100 369,900

CC

Beginning WIP Inventory (35%) Started Units to account for Beginning WIP Inventory Started and completed Transferred out Ending WIP Inventory (45%) Units accounted for

10,800 340,800 351,600 18,300 369,900

10,800 340,800 8,235 359,835

LO.2 (WA EUP) For each of the following situations, use the weighted average method to determine the equivalent units of production for labor and overhead, assuming that they are continuously at the same percentage of completion: a.

Beginning WIP Inventory (40% complete) Units started in production Units transferred out Ending WIP Inventory (70% complete)

10,000 350,000 344,000 16,000

b.

Beginning WIP Inventory (30% complete) Units started in production Units transferred out Ending WIP Inventory (80% complete)

40,000 480,000 ? 26,000

c.

Beginning WIP Inventory (55% complete) Units started in production Units transferred out Ending WIP Inventory (90% complete)

15,000 405,000 415,800 ?

d.

Beginning WIP Inventory (25% complete) Units started in production Units transferred out Ending WIP Inventory (45% complete)

10,800 ? 351,600 18,300

20. a. Units CC Beginning WIP Inventory (40%) 10,000 Started 350,000 Units to account for 360,000

Beginning WIP Inventory (60%) 10,000 6,000 Started and completed 334,000 334,000 Transferred out 344,000 Ending WIP Inventory (70%) 16,000 11,200

Units accounted for 360,000 351,200 b. Units CC Beginning WIP Inventory (30%) 40,000 Started 480,000 Units to account for 520,000

Beginning WIP Inventory (70%) 40,000 28,000 Started and completed 454,000 454,000 Transferred out 494,000 Ending WIP Inventory (80%) 26,000 20,800 Units accounted for 520,000 502,800 c. Beginning WIP Inventory (55%) Started Units to account for

Units 15,000 405,000 420,000

Beginning WIP Inventory (45%) Started and completed Transferred out Ending WIP Inventory (90%) Units accounted for

15,000 400,800 415,800 4,200 420,000

6,750 400,800

Units 10,800 359,100 369,900

CC

Beginning WIP Inventory (35%) Started Units to account for

d.

CC

3,780 411,330

Beginning WIP Inventory (65%) Started and completed Transferred out Ending WIP Inventory (45%) Units accounted for

10,800 340,800 351,600 18,300 369,900

7,020 340,800 8,235 356,055

LO.2, LO.3, & LO.6 (WA & FIFO EUP) Fun time Inc. makes small toys in a one-department production process. Plastic is added at the beginning of the process; all other materials are considered indirect. The following information is available relative to September 2010 production activities: Beginning WIP Inventory: Started into production: Ending WIP Inventory: a. b. c. 21. a.

15,000 toys (60% complete as to labor; 75% complete as to overhead) plastic for 620,000 toys 25,400 toys (35% complete as to labor; 60% complete as to overhead)

Compute the EUP for direct material, direct labor, and overhead using weighted average process costing. Compute the EUP for direct material, direct labor, and overhead using FIFO process costing. Reconcile the calculations in parts (a) and (b). Beginning WIP Inventory (100%; 60%; 75%) Started

15,000 620,000

To account for

635,000

Beginning WIP Inventory Started & completed Ending WIP Inventory Equivalent units b. Beginning WIP Inventory Started & completed Ending WIP Inventory Equivalent units c. Equivalent units (WA) EUP in beginning WIP Inventory Equivalent units (FIFO)

Beginning WIP Inventory

Units 15,000 594,600 25,400 635,000 Units 15,000 594,600 25,400 635,000

15,000

Started and completed

594,600

Ending WIP Inventory (100%; 35%; 60%) Accounted for

25,400 635,000

DM 15,000 594,600 25,400 635,000 DM

DL 15,000 594,600 8,890 618,490

OH 15,000 594,600 15,240 624,840

0 594,600 25,400 620,000

DL 6,000 594,600 8,890 609,490

OH 3,750 594,600 15,240 613,590

635,000

618,490

624,840

(15,000) 620,000

(9,000) 609,490

(11,250) 613,590

LO.2 & LO.3 (WA & FIFO EUP) Ynugai Corp. uses a process costing system to assign costs to its steel production. During March 2010, Ynugai had beginning Work in Process Inventory of 180,000 tons of steel (100 percent complete as to material and 65 percent complete as to conversion). During the month, the raw material needed to produce 3,400,000 tons of steel was started in process. At month-end, 165,000 tons remained in WIP Inventory (100 percent complete as to material and 40 percent complete as to conversion). a. b. c. d. e. 22. a.

Compute the total units to account for. Determine how many units were started and completed. Determine the equivalent units of production using the weighted average method. Determine the equivalent units of production using the FIFO method. Reconcile your answers to parts (c) and (d). Beginning WIP Inventory Tons started Total tons to account for

180,000 3,400,000 3,580,000

b.

Total tons to account for Tons in ending WIP Inventory Tons transferred out Tons in beginning WIP Inventory Tons started & completed (tons)

3,580,000 (165,000) 3,415,000 (180,000) 3,235,000

c. Beginning WIP Inventory Started & completed Ending WIP Inventory (100%, 40%) WA EUP

d.

Material 180,000

Conversion 180,000

3,235,000

3,235,000

165,000

66,000

3,580,000

3,481,000

Material Beginning WIP Inventory (0%, 35%) Started & completed Ending WIP Inventory (100%, 40%) FIFO EUP

e.

0 3,235,000 165,000 3,400,000 DM 3,580,000 (180,000) 3,400,000

WA EUP Equivalent units in BI FIFO EUP

Conversion 63,000 3,235,000 66,000 3,364,000

CC 3,481,000 (117,000) 3,364,000

LO.2, LO.3, & LO.6 (WA & FIFO EUP) On April 30, 2010, Alvira Co. had 21,600 units in process that were 85 percent complete as to material, 60 percent complete as to direct labor, and 45 percent complete as to overhead. During May, 561,000 units were started. Th e 13,700 units in ending inventory were 75 percent complete as to material, 25 percent complete as to direct labor, and 10 percent complete as to overhead. a. b. c. d. e.

Calculate the physical units to account for in May. How many units were started and completed during May? Determine May’s EUP for each category using the weighted average method. Determine May’s EUP for each category using the FIFO method. Reconcile your answers to parts (c) and (d).

23. a. Beginning Inventory Units started Units to account for

21,600 561,000 582,600

b. Units to account for Units in BI Units in EI Units started & completed c.

582,600 (21,600) (13,700) 547,300

BI Started & completed EI (75%, 25%, 10%) EUP (WA)

DM 21,600 547,300 10,275 579,175

DL 21,600 547,300 3,425 572,325

OH 21,600 547,300 1,370 570,270

BI (15%, 40%, 55%) Started & completed EI (75%, 25%, 10%) EUP (FIFO)

DM 3,240 547,300 10,275 560,815

DL 8,640 547,300 3,425 559,365

OH 11,880 547,300 1,370 560,550

d.

e. EUP (WA) Equivalent units in BI EUP (FIFO)

DM 579,175 (18,360) 560,815

DL 572,325 (12,960) 559,365

OH 570,270 (9,720) 560,550

LO.2 (Cost per WA EUP) In October 2010, Rojo Inc.’s production was 53,600 equivalent units for direct material, 48,800 equivalent units for direct labor, and 42,000 equivalent units for overhead. During October, direct material, conversion, and overhead costs incurred were as follows: Direct material Conversion Overhead

$158,688 189,648 85,200

Beginning WIP Inventory costs for October were $26,232 for direct material, $39,024 for direct labor, and $20,640 for overhead. a. b.

How much did Rojo Inc. spend on direct labor in October? What was the October weighted average cost per equivalent unit for direct material, direct labor, and overhead?

24. a. DL cost = Conversion cost – OH cost = $189,648 – $85,200 = $104,448 b. Beginning WIP Inventory

DM $26,232

DL $19,504

Overhead $20,640

Current period

158,688

104,448

85,200

Total costs

$184,920

$123,952

$105,840

Divided by EUP

÷ 53,600

÷ 48,800

÷ 42,000

$3.45

$2.54

$2.52

Cost per EUP

LO.3 (Cost per FIFO EUP) Assume that Rojo Inc. in the previous exercise had 7,200 EUP for direct material in October’s beginning WIP Inventory, 8,000 EUP for direct labor, and 7,920 EUP for overhead. What was the October FIFO cost per EUP for direct material, direct labor, and overhead? DM 53,600 (7,200) 46,400

DL 48,800 (8,000) 40,800

Current period cost

$158,688

$104,448

$85,200

Divided by EUP

÷ 46,400

÷ 40,800

÷ 34,080

$3.42

$2.56

$2.50

25. WA EUP Beginning WIP EUP FIFO EUP

Cost per EUP

Overhead 42,000 (7,920) 34,080

LO.2 & LO.3 (Cost per WA & FIFO EUP) Pylonic Mfg. produces concrete garden border sections. All materials are added at the beginning of processing. Production and cost information for May 2010 are as follows: WA EUP Direct material Direct labor Overhead FIFO EUP

160,000 sections 152,000 sections 150,000 sections

Direct material Direct labor Overhead Beginning WIP Inventory costs Direct material Direct labor Overhead Current period costs Direct material Direct labor Overhead

120,000 sections 124,000 sections 132,000 sections $19,600 6,320 10,020 $54,000 34,720 84,480

a. What is the total cost to account for? b. Using weighted average process costing, what is the cost per equivalent unit for each cost component? c. Using FIFO process costing, what is the cost per equivalent unit for each cost component? d. How many units were in beginning. 26. a.

DM $ 19,600 54,000 $ 73,600

DL $ 6,320 34,720 $41,040

OH $ 10,020 84,480 $ 94,500

Total $ 35,940 173,200 $209,140

b. Total costs WA EUP Cost per EUP

$ 73,600 ÷ 160,000 $0.46

$ 41,040 ÷ 152,000 $0.27

$ 94,500 ÷ 150,000 $0.63

$209,140

c. Current costs FIFO EUP Cost per EUP

$ 54,000 ÷ 120,000 $0.45

$ 34,720 ÷ 124,000 $0.28

$ 84,480 ÷ 132,000 $0.64

$173,200

160,000 120,000 40,000

152,000 124,000 28,000

150,000 132,000 18,000

100%

70%

45%

Beginning WIP Current period Total

d. WA EUP FIFO EUP Beg. WIP EUP Percent complete

$1.36

$1.37

LO.2 (WA EUP; cost per WA EUP) Be Gone manufactures spray cans of insect repellent. On August 1, 2010, the company had 9,800 units in the beginning WIP Inventory that were 100 percent complete as to canisters, 60 percent complete as to other materials, 40 percent complete as to direct labor, and 20 percent complete as to overhead. During August, Be Gone started 81,500 units in the manufacturing process. Ending WIP Inventory included 4,600 units that were 100 percent complete as to canisters, 40 percent complete as to other materials, 20 percent complete as to direct labor, and 10 percent complete as to overhead. Cost information for the month is as follows: Beginning WIP Inventory Canisters Other direct materials Direct labor Overhead August costs Canisters Other direct materials Direct labor Overhead

$ 6,535 6,174 6,431 1,070 61,940 86,793 81,189 160,176

Prepare a schedule showing the Be Gone August 2010 computation of weighted average equivalent units of production and cost per equivalent unit. Units

27. Beginning WIP

Units Beginning WIP

Inventory Units started Units to account for

Beginning WIP Inventory Started & completed EI EUP

9,800 81,500 91,300

Canisters

Other Materials

9,800 76,900 4,600 91,300

9,800 76,900 1,840 88,540

Costs: Beginning WIP Current period Total cost Divided by EUP Cost per EUP

Inventory Started & completed Ending WIP Inventory Accounted for

Other Materials $ 6,174 86,793 $92,967 ÷ 88,540 $1.05

Canisters $ 6,535 61,940 $68,475 ÷ 91,300 $0.75

9,800 76,900 4,600 91,300 DL

OH

9,800 76,900 920 87,620 DL $ 5,594 82,026 $87,620 ÷ 87,620 $1.00

9,800 76,900 460 87,160 OH 1,070 160,176 $161,246 ÷ 87,160 $1.85

Total $ 19,373 390,935 $410,308

$

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